In the world of trading, there is a strategy called the London breakout it is a strategy that many forex traders swear by. The strategies based on the fact that before the London session opens after the lower volatility Asian session is drawing to a close; as this Asian session closes in the European trading session begins there is a spike in volatility because the Europeans have the highest volume of trading activity in terms of liquidity. it is this transition from low volatility to high volatility that some advanced traders choose to monopolize on and make some decent income.
Now that you know there is a training opportunity that arises when the London stock exchange opens at 8 a.m. GMT you can prepare yourself for this awesome strategy. If you live in North-America this does mean that you have to be up and ready to trade at 3:00 a.m. eastern standard time. Some experts say that you can still make money off this strategy all the way until 11:00 a.m. eastern standard time. So first things first set your alarm clock and get ready for an early morning if you are in the united states.
The strategy is pretty simple and has only a handful of rules.
- You must choose a deep in the money binary that expires around the end of the day which is about 3 p.m.
- If you see a full deviation move on the deviation to that means that it is a valid trading day.
- If there is no deviation move then there should be no trading for that day on your part with this strategy.
- It is recommended to use the 15-minute candlesticks and the GBP/USB pairs.
The initial direction of the breakout is usually depending on the direction that the market is already moving in the market opening that day. As I said earlier you can use the EMA trend line and the RSI information to decide whether or not it is a good trading setup for you. If you are using a platform like Nadex then you may be able to start trading before the European market opens for retail traders which means you can really catch the swing right before the market opens.
This is a relatively simple strategy they can be used as the as long as you have your timing and analysis correct. The London daybreak strategy for binary options is a solid strategy but as with most strategies that focus on trading breakouts you must be wary of the possibility and that the breakout could go in the opposite direction you intended to. Give the strategy a try on the demo trading platform over at Nadex And see if it's right for you. I have found that it works best during the middle of the week from Tuesday to Thursday but there is usually choppy markets on Mondays and Fridays when it comes to the strategy.
I personally like the premise behind the strategy and have even gone so far as to customize it so that I can use it for binary options trading during the opening up the American markets. Maybe in a few months after I have a good grasp on this customized strategy I will share its nuances with you guys. Until then I hope you guys enjoy this one and I hope it helps you in your trading journey!
This article was written by @bulma and edited by @flashfiction. This article can be found on PROFITRIBES.
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